What this calculator does
This calculator works backward from income to a purchase price. You enter your gross annual income, existing monthly debt payments, available down payment, expected rate and term, and estimated ongoing housing costs. The calculator applies a debt-to-income ratio — a ceiling on how much of your gross monthly income can go toward debt — and solves for the highest purchase price that stays within it.
It also shows you which ratio is binding: the front-end (housing-only) ratio, or the back-end (total-debt) ratio. That tells you which lever actually moves the answer — and which one does not.
What the inputs mean
- Gross annual income — your income before taxes, from all sources you expect a lender to count. For a joint application, use the combined income of both borrowers. Use W-2 or salaried income if it is stable; self-employment, bonus, and commission income are often averaged over two years and may be treated more conservatively.
- Monthly debt payments — the minimum payments on all recurring debts a lender would count: credit cards (minimum payment), student loans, auto loans, personal loans, other mortgages. Do not include utilities, groceries, subscriptions, or the new mortgage payment itself — those are not counted in lender DTI calculations.
- Down payment — the dollar amount you plan to put down. This affects both the loan size and your loan-to-value ratio, which influences your rate, your PMI status, and your lender options.
- Interest rate and term — the note rate and loan length you expect. Use a current market rate as a realistic baseline; your actual rate will depend on your credit score, loan type, and lender.
- Annual property tax rate — as a percentage of home value. The calculator uses this to back property tax out of your housing budget when solving for price.
- Annual homeowners insurance — total annual premium in dollars.
- Monthly HOA dues — if applicable. If not, enter zero.
- DTI profile — see the section below.
The DTI ratio profiles — and what they are not
The three profiles are planning conventions, not underwriting rules. They are not the ratios any lender is required to apply, and a number produced here is not an approval or a denial.
In particular, the frequently repeated “43% DTI limit” is out of date as a general rule. The CFPB's General Qualified Mortgage definition replaced the categorical 43% cap with a price-based approach tied to the loan's APR relative to the average prime offer rate. Separately, loans underwritten through Fannie Mae's and Freddie Mac's automated systems routinely go higher, and FHA loans can go higher still with compensating factors. Your actual eligibility depends on loan type, credit score, reserves, residual income, LTV, investor and insurer overlays, and your lender's own policy. Only a lender can tell you what you qualify for.
- Conservative (28% / 36%) — front-end housing ratio of 28%, back-end total-debt ratio of 36%. A traditional guideline that leaves more breathing room. Many financial planners recommend staying at or below this range.
- Standard (31% / 43%) — a common reference point from FHA and conventional guidelines, though neither is a hard cap in current practice.
- Stretch (35% / 45%) — higher ratios that automated underwriting systems may approve for borrowers with strong compensating factors (high credit scores, large reserves, stable employment). Buying at this ceiling leaves little financial slack.
Qualifying for a payment is not the same as affording it
A lender's ratios do not know about childcare costs, retirement contributions, medical expenses, irregular income, job security, or how much financial slack you need to sleep at night. It is entirely possible — and common — to be approved for a payment that causes genuine financial stress. The number this calculator produces is a ceiling, not a target. The right number for most people is noticeably below the maximum they qualify for.
Your numbers
Before taxes — the figure lenders use.
Car loans, student loans, minimum card payments — not utilities or groceries.
Loan & carrying costs
The share of gross monthly income allowed for housing, and for housing plus all other debts. The classic rule is 28/36; many loans today approve up to the standard or aggressive range.
Ledger reads
Price range$0
estimated maximum home price
- Loan amount
- —
- Down payment share
- —
- Monthly budget, housing
- —
- — principal & interest
- —
- — taxes, insurance, HOA
- —
- Binding limit
- —
How lenders decide what you can afford
Two ratios do almost all the work. The front-end ratio caps your total monthly housing cost — principal, interest, taxes, insurance, and HOA — as a share of gross monthly income. The back-end ratio caps housing plus every other monthly debt. Whichever cap you hit first is your ceiling; this worksheet shows which one is binding for you.
Notice that monthly debts punch above their weight. Every $100/month of car payment or student loan doesn't just cost $100 — it removes $100 from your allowable housing payment, which at today's rates translates to roughly $15,000 of home price. Paying off a small loan before applying can move your ceiling more than months of saving.
A lender's maximum is not a recommendation. The ratios describe what you can be approved for, not what leaves room for retirement savings, childcare, or a roof that fails in year three. Many people deliberately buy one notch below their approval — run the conservative profile and see how the number changes.
Why is the down payment counted the way it is?
The ratios determine how large a loan you can carry; the down payment then adds on top of that loan to reach a price. A bigger down payment raises your maximum price dollar-for-dollar — and if it gets you to 20% down, it also removes PMI from the picture (see the PMI guide).
Does this include PMI?
No. If your down payment lands under 20% of the resulting price, expect PMI to take a further bite out of the housing budget — typically 0.3%–1.5% of the loan per year. The estimate here is slightly optimistic in that case.
What should I do with this number?
Take the resulting price to the main calculator, build the full amortization schedule, and look at the total interest line — the monthly payment is what you qualify on, but the schedule is what you actually sign up for.
This tool is for general planning purposes only and isn't financial, legal, or lending advice. Actual approval depends on credit score, loan program, and lender overlays — get pre-qualified for a real number.
When to use this calculator
Understanding which constraint is binding
The calculator shows you whether the front-end (housing) ratio or the back-end (total debt) ratio is what caps your price. If the back-end ratio is binding, it means existing debts are crowding out your housing budget. Every $100/month of recurring debt you eliminate (a car loan paid off, a credit card cleared) frees up several thousand dollars of purchase price. The calculator tells you exactly how much: look for the note in the verdict when the back-end ratio is binding.
Comparing the effect of a larger down payment
Down payment affects price two ways in this calculator: directly (larger down payment means smaller loan for the same price) and indirectly (it changes what your monthly payment factor looks like in the algebra). Try doubling your down payment and see how much price range it opens up — sometimes it is less than people expect, because the binding constraint is income, not loan size.
Setting a realistic budget before starting to shop
Use the conservative profile first. Whatever number it produces is a ceiling at a comfortable margin. Then decide deliberately whether you want to stretch toward the standard or stretch profiles, and what you are trading away to do it. Going into a home search with a hard number you chose rather than the maximum a lender might approve is one of the most useful things this calculator can provide.
Frequently asked questions
Does this include PMI in the monthly payment?
No. The calculator does not add a PMI premium to the monthly housing cost. If your down payment is below 20% of the purchase price, the calculator will note that PMI likely applies, but it does not adjust the payment for it. This means the purchase price shown may be slightly overstated if PMI would push your actual monthly cost above the ratio cap. As a rough correction: add an estimated PMI cost (typically 0.5–1.5% of the loan amount annually, divided by 12) to your monthly insurance figure.
What income should I use for a joint application?
Use the combined gross income of all borrowers on the loan. If one borrower's income is irregular or hard to document, lenders may weight it differently or require averaging over two years. Use the income a lender will actually count, which may be lower than total household income if some earners are not on the loan.
How do lenders treat student loans in DTI?
It depends on the loan program. For conventional loans, servicers generally use the actual monthly payment if you are in repayment, or 0.5–1% of the outstanding balance per month for deferred loans (depending on investor guidelines). FHA has its own rules. If you have large student loan balances, ask a lender specifically how they will be treated before assuming this calculator's result reflects your actual eligibility.
Why does my purchase price go down when I add HOA dues?
HOA dues count as part of your housing payment in the front-end ratio, and the calculator holds the total housing budget constant. If dues consume part of that budget, less is left for the mortgage payment, which means the qualifying loan amount — and therefore the price — falls.
Should I use the maximum this calculator produces?
Probably not. The calculator shows what you could theoretically qualify for at a given ratio. Most financial advisers suggest targeting the conservative profile (28%/36%) and treating the stretch profile as an absolute ceiling rather than a goal. Buying at the top of your range leaves no buffer for income drops, unexpected expenses, or rate changes on an adjustable-rate product.
Sources
This calculator is an educational planning tool. Results are estimates based on the inputs and assumptions described on the methodology page. Nothing here is a loan offer, a rate quote, a pre-qualification, or financial advice. Verify every figure against your lender's official Loan Estimate or Closing Disclosure before making any decision.